No currency to replace dollar for now, says RBI governor

The dollar will continue to be the global reserve currency for the immediate future as there is no other currency that is capable of replacing the US unit, Reserve Bank governor Duvvuri Subbarao said.

Taking a stance on the reserve currency issue at an interview with Central Banking Publications, in London, the RBI governor said he had studied the debate about the dollar as the reserve currency as also the implications for the world economy and for emerging economies

"At this time I'm not sure if there is a currency that can replace the dollar. In any case, replacing the dollar can't happen by fiat. It has to happen on the strength of that alternate currency. But I do want to say that in terms of the international monetary order, we are facing a situation where finance is globalised, but we still have regulation at the national level. We need to look at the implications of this for monetary policy, especially for countries with fixed exchange rates and for emerging economies," Subbarao said.

"It's also important to focus on global imbalances. If we accept, as seems to be the current consensus, that these imbalances were one of the structural causes of the crisis, and given that you cannot have a world without imbalances, what can we do to ensure that the world is in a better position to minimise imbalances, and to the extent that they exist, to manage them?' he asked.

He said the issue has to be debated in the appropriate international fora such as the IMF, the BIS and the very effective G20.

"Important topics such as this must be discussed at all these fora. And I believe that they are likely to be discussed for much longer than we think before we reach an agreed view on a minimum acceptable programme," he said.